A few years later a gigantic enterprise was undertaken by the South
Sea Company, a body of merchants originally organized as a company
trading in the southern Atlantic and Pacific oceans. A Scotchman
named Law had started a similar project in France, known as the
"Mississippi Company," which proposed to pay off the national debt of
France from the profits of its commerce with the West Indies and the
country bordering on the Mississippi River.
Following his example, the South Sea Company now undertook to pay off
the English National Debt (S503), mainly, it is said, from the profits
of the slave trade between Africa and Brazil.[1] Sir Robert Walpole
(S534) had no faith in the scheme, and attacked it vigorously; but
other influential members of the Government gave it their
encouragement. The directors came out with prospectuses promising
dividends of fifty per cent on all money invested. Everybody rushed
to buy stock, and the shares rapidly advaced from 100 pounds to 1000
pounds a share.
[1] Loftie's "History of London"; and see S512.
A speculative craze followed, the like of which has never since been
known. Bubble companies sprang into existence with objects almost as
absurd as those of the philosophers whom Swift ridiculed in
"Gulliver's Travel's," where one man was trying to make gunpowder out
of ice, and another to extract sunbeams from cucumbers.
A mere list of these companies would fill several pages. One was to
give instruction in astrology, by which every man might be able to
foretell his own destiny by examining the stars; a second was to
manufacture butter out of beech trees; a third was for a wheel for
driving machinery, which once started would go on forever, thereby
furnishing a cheap perpetual motion.
A fourth projector, going beyond all the rest in audacity, had the
impudence to offer stock for sale in an enterprise "which shall be
revealed hereafter." He found the public so gullible and so greedy
that he sold 2000 pounds worth of the new stock in the course of a
single morning. He then prudently disappeard with the cash, and the
unfortunate investors found that where he went with their money was
not among the things to "be revealed hereafter."
The narrow passage leading to the London stock exchange was crowded
all day long with struggling fortune hunters, both men and women.
Suddenly, when the excitement was at its height, the bubble burst, as
Law's scheme in France had a little earlier.
Great numbers of people were hopelessly ruined, and the cry for
vengeance was as loud as the bids for stock had once been. One
prominent government official who had helped to blow the bubble was
sent to the Tower. Another committed suicide rather than face a
parliamentary committee of investigation, one of whose members had
suggested that it would be an excellent plan to sew the South Sea
directors up in sacks and throw them into the Thames.